State Legislators Share Their Pain

 
It was the budgetary equivalent of an Alcoholics Anonymous meeting.

"Hello. My name is [insert name of state legislator]. I'm from [insert name of state]. And I have a budget problem."

So it went, on down the line and around the room, as legislators from more than two-dozen states shared budget-balancing stories at the National Conference of State Legislatures Fall Forum in Washington, D.C.

Their stories, by and large, were not cheery. The words "crisis" and "woes" peppered the tales, although most lawmakers did manage to keep a sense of humor.

What emerged from the meeting is a distinct sense that state legislators are managing to get by, albeit with some difficulty, and that they are bringing their states' budgets into balance, a requirement in all but one state.

Their methods for doing so, however, whether tax increases or reserve fund raids or program cuts, and their opinions on those methods, differ from state to state and lawmaker to lawmaker, as evidenced by comments at the meeting.

"We [Kansas lawmakers] increased taxes and reduced receipts. [Tax increases] don't work very good when you have an economy falling completely out of bed," said Kansas state Rep. Melvin Neufeld (R).

The three main legs of Kansas' economy the oil and gas sector, agriculture and airplane construction have been kicked out from under the state, leaving the economy in a kind of "free fall," said Neufeld. As a result, lawmakers are unlikely to raise taxes again, he said.

But there is one bright spot in Kansas' revenue picture the cigarette tax.

"The cigarette tax is actually raising more money than we anticipated. Apparently people are nervous enough they are smoking more," said Neufeld.

In Vermont, the estate tax has helped keep the state afloat in the dry years, according to state Sen. Susan Bartlett (D).

"If you are wealthy and you die, we get a big estate tax. In the eight years I've been in appropriations we get to these situations [deficits] and fortunately somebody wealthy alters their state [dies]. Every year, when it's tight, we've run way ahead in that and we say, 'Thank you,'" she said.

Jokingly she added, "We thought about a whole economic development thing 'Come To Vermont And Die' but decided it wouldn't work very well."

Continuing with the macabre humor, Delaware Controller General Russell Larson said: "Unfortunately, unlike the other states that have done well on their death taxes, we're running quickly out of DuPonts."

This is a problem for a state that depends heavily on income from corporate transactions and public offerings of stocks, which are currently very slow areas of the economy.

"We still command about 90 percent of the new initial public offerings, but 90 percent of nothing is nothing," said Larson.

Larson added that a state ban on cigarette smoking in public areas is hurting the budget, as revenues from the state's slot machines have been following patrons to West Virginia, where gamblers can smoke while they wager.

Also, new competition for Delaware's slot machines may be on the way. Neighboring Pennsylvania is considering adding slots to the state's four horse racing tracks.

"On the horizon for us, probably some form of gambling, which we do not have at all in our state," said Pennsylvania state Rep. David Steil (R). "Probably, we will institute some form of slot machines at our four horse racing tracks and we will begin to claim some of the revenue going to Delaware and other places."

Another source of revenue for the state is tipping fees from trash at landfills.

"We imposed increased tipping fees for trash at our landfills. Pennsylvania has a substantial amount of landfill capacity. As a result, we receive a lot of out-of-state trash. So for the moment anyhow, we're welcoming your trash," said Style.

Wisconsin state Sen. Robert Cowles (R) had cautionary words for lawmakers considering securitizing their tobacco revenues or proposing new programs.

"We have massive overruns in Medicaid BadgerCare, the state's healthcare insurance program for the poor, and prescription drugs. Wisconsin did do something quite creative, we created an expensive new program when we were in the hole it's called prescription drugs," he said.

"Wisconsin has extinguished every accounting trick you can imagine. The entire tobacco fund is gone. I hope you don't go down that road. Wisconsin actually has to really balance the budget [now] because I don't think there are any more pots of one-time money available or any accounting tricks left," said Cowles.

And in Louisiana, lawmakers facing reelection next year are nervous about any of the budget-balancing methods they may employ, said Louisiana state Rep. John Diez (D).

"Since the election is next year, there is no support for tax increases in Louisiana, although there's not a whole bunch of support for cutting anything either," he said. "And we can't have a deficit. So I guess you could say we have a real problem, like the rest of you."
 
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